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Boeing CEO Pushed Out as Company Reels From 737 MAX Debacle

Boeing Co.


BA 2.70%

named a new chief executive officer as the aerospace giant deals with its biggest crisis in decades, caused by the crashes and grounding of its 737 MAX jetliner.

The company said David L. Calhoun would replace Dennis Muilenburg as CEO.

Boeing named David L. Calhoun, pictured in 2017, to be the new CEO.


Photo:

Christopher Goodney/Bloomberg News

Boeing stripped Mr. Muilenburg of his role as chairman in October, handing the responsibility to Mr. Calhoun, a private-equity executive and longtime director.

Boeing and its leadership have taken a reputational hit for the company’s handling of the MAX following two fatal crashes that claimed a total of 346 lives, triggering calls from lawmakers, victims’ families and others for Mr. Muilenburg to step down.

He and the company initially maintained that the 737 MAX was safe despite investigators linking problems with the jetliner’s software to the crash of a Lion Air flight in Indonesia in October 2018 and a crash of an Ethiopian Airlines MAX outside Addis Ababa in March.

Mr. Muilenburg’s defense of the MAX after the second crash made him a target of criticism, though he subsequently apologized to victims’ families on multiple occasions and admitted Boeing made mistakes.

His departure comes after Boeing said in December that it would suspend production of the MAX in 2020 amid uncertainty over the aircraft’s future, a move that will add pressure to Boeing’s finances and the U.S. economy. The MAX, which has almost 5,000 orders, is Boeing’s best-selling airplane.

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The company estimates the MAX crisis will cost it $10 billion, a figure analysts expect to at least double. Regulators recently warned the Chicago-based company that it was setting unrealistic expectations for when the jetliner would be allowed to fly again.

Mr. Muilenburg, has been CEO since 2015. Before the MAX grounding, Boeing shares had more than tripled during his tenure as the company boosted jetliner production and returned a bigger portion of profits to shareholders through stock buybacks and higher dividends.

The Federal Aviation Administration isn’t expected to approve fixes to the flight-control system implicated in the MAX crashes, as well as related changes to pilot training, before February, according to people familiar with the matter.

The crisis has disadvantaged Boeing in its competition with Airbus SE to supply carriers in a fast-growing air travel market. The two plane makers have a backlog of more than 13,000 jet orders, representing seven years of production. Boeing had planned to build more than 900 aircraft this year, including almost 600 MAX jets.

Mr. Muilenburg joined Boeing as an engineering intern in 1985 before graduating as an aerospace engineer from Iowa State University a year later.

He rose through the ranks to take charge of Boeing’s defense business in 2009. The unit faced challenges including an Army contract that was canceled after running up more than $20 billion in costs. Most of the blame for the mess fell on the Pentagon.

After taking over from Jim McNerney as CEO in July 2015, Mr. Muilenburg focused on weak spots in Boeing’s sprawling operations. He secured long-term labor deals, addressed a pension deficit and reversed slowing defense sales.

During a late October House hearing, former Boeing CEO Dennis Muilenburg explained three key mistakes the company made. Photo: Reuters/Sarah Silbiger (Originally published Oct. 30, 2019)

Mr. Muilenburg faced criticism from President Trump over the cost of the next Air Force One. He worked to appease the president, hosting Mr. Trump for the first flight of the newest Dreamliner.

Boeing’s defense and space unit was a source of persistent problems during Mr. Muilenburg’s tenure. Development of its Starliner space capsule fell behind schedule, and its first test flight in December ran into problems. Also, the U.S. Air Force has complained of shoddy quality on a multibillion-dollar contract to build the KC-46A Pegasus refueling plane. Boeing has recorded more than $3 billion in losses on that program.

Former Boeing employees questioned why Mr. Muilenburg didn’t ground the MAX after the first crash in October 2018. Others said he shouldn’t be held accountable for the design of flight-control systems.

Mr. Muilenburg wasn’t CEO at the aircraft’s genesis, but he was in charge for two years before the MAX entered service in 2017. During that period, people familiar with the matter said, Boeing engineers increased the power of the flight-control system, a design change that accident investigators have said contributed to both crashes.

It was also under his tenure that Boeing for months failed to notify regulators that a safety-related feature on the MAX wasn’t functioning. Mr. Muilenburg said he was kept in the dark, too.

After the crash in Ethiopia in March, Mr. Muilenburg said Boeing had been working on a software fix since the first crash. He apologized for the loss of life and vowed to focus on preventing such tragedies.

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Corrections & Amplifications
David L. Calhoun will replace Dennis Muilenburg as Boeing CEO, and Lawrence W. Kellner will become chairman. An earlier headline on this article incorrectly said Mr. Kellner would be CEO.

Write to Andrew Tangel at [email protected]

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